James Allen, head of Walker Crips Alternative Investments, comments on today’s data from The Department of Communities and Local Government House Building statistics for Q2 2017,
“Today’s new house building figures should be met with cautious optimism even though the sector seems to be in generally good health. The trends for new house build starts and completions show that the market has recovered to pre-crisis levels. There is also significant convergence between the number of starts and completions which implies that there are few projects not being seen through to completion.
“The data is, however, no cause for real celebration as it belies the deeper issue of housing supply. There is a maximum capacity for new builds from the private sector and at c140,000 (85% of all new build starts) there is little room to increase activity. Housing associations have historically been able to deliver between 20,000-30,000 new units per annum so given they are currently producing c25,000 they will struggle to provide significantly more.
“The Barker Report, which reviewed land use planning in 2006, suggested that we need to create 209,000 new units per annum in order to keep pace with changing demographics and we have been well short of this figure every year since then.
“The most obvious way to address this dearth of supply is to give local authorities a mandate to once again build housing. Local authorities currently account for less than 1% of new housing. While I do not advocate a return to 1960s type building schemes, a short term, five year plan to allow local authorities to borrow at cheap interest rates in order to rapidly address the housing shortage in target areas should not be considered political dogma. It is a sensible solution to a long term crisis.”
For more information or to speak to James, please contact Danae Quek on 020 3761 4427 or email walkercrips@fourbroadgate.com.
